Correlation Between Dreyfus Research and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both Dreyfus Research and IShares MSCI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dreyfus Research and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dreyfus Research Growth and iShares MSCI USA, you can compare the effects of market volatilities on Dreyfus Research and IShares MSCI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dreyfus Research with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Research and IShares MSCI.

Diversification Opportunities for Dreyfus Research and IShares MSCI

0.93

Correlation Coefficient

Dreyfus Research  IShares MSCI

Almost no diversification

The 3 months correlation between Dreyfus and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Research Growth and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Dreyfus Research is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dreyfus Research Growth are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Dreyfus Research i.e., Dreyfus Research and IShares MSCI go up and down completely randomly.

Pair Corralation between Dreyfus Research and IShares MSCI

Assuming the 90 days horizon Dreyfus Research is expected to generate 1.31 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Dreyfus Research Growth is 1.04 times less risky than IShares MSCI. It trades about 0.09 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,089  in iShares MSCI USA on October 5, 2024 and sell it today you would earn a total of  5,858  from holding iShares MSCI USA or generate 38.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.63%
Values	Daily Returns

Dreyfus Research Growth  vs.  iShares MSCI USA

Dreyfus Research Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Research Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dreyfus Research and IShares MSCI

The main advantage of trading using opposite Dreyfus Research and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Research position performs unexpectedly, IShares MSCI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind Dreyfus Research Growth and iShares MSCI USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.